DAAR Communication Plc loss position to end 2014 highlights the woes of media houses in Africa largest economy where the tough operating environment continues to crimp growth prospects.
For the year ended December 2013, Daar Communication posted a net loss of N3.41 billion from N273.87 million profits it recorded the previous year, the Lagos based year said in statement on the website of the NSE. Sales increased by 32 percent to N5.60 billion.
The company couldn’t translate top line impressive performance to bottom line growth as rising production costs swallowed most of revenues from commercials.
Cost of sales margin was as high as N0.95, which means it spent 95.53 percent on input costs to produce each unit of product.
The challenging conditions facing firms in Nigeria like huge energy costs caused by high diesel expenses, devaluation of the naira that culminated in imported inflation as raw materials are imported and weak consumer spending has forced media houses to resort to job and salary cuts.
In the print for instance, growth has been hampered as firms and governments agencies cut down budgets on adverts and consumers are no longer buying papers as they used to as their wallets get squeezed.
Analysts say hard times lie ahead for media houses as the recent erratic fuel shortages that nearly caused economic seizure will further weaken consumer spending and slow revenue from adverts as firms bottom line were dented.
Nigeria’s consumer inflation rose to 9.0 percent year-on-year in May, the upper end of a central bank target, from 8.7 percent in April, marking the highest rate since May 2013, the national statistics office said.
Daar Communication total assets moved by 10.97 percent to N25.28 billion in 2013 as against N22.78 billion last year.
Shareholder’s fund dipped by 33.13 percent to N12.01 billion in 2013 compared with N17.96 billion in 2012, caused by N5.39 billion negative reserves in its balance sheet.
The negative reserve means the company has been incurring more losses than profits since its existence. Operating expenses increased by 25 percent to N2.60 billion in 2013 as against N2.08 billion last year.
Daar Communications share price has been stagnant at N0.50 on the floor of the NSE while market capitalization was N6 billion.
BALA AUGIE
